Iraq set to sign 7 key oil field contracts

Baghdad, December 20, 2009

The contracts will then be submitted to the cabinet for final approval, according to a report in our sister newspaper Gulf Daily News.

Today, the consortium comprising Anglo-Dutch firm Shell (60 per cent) and Malaysia's Petronas (40 per cent), will sign a pre-contract for the development of Majnoon, with estimated reserves of 12.58 billion barrels.

Tomorrow, Petronas will again sign in a 60-40 partnership with Japanese firm Japex a pre-contract to exploit the Garraf field, whose reserves are estimated at 863 million barrels.

On Tuesday, a consortium grouping China's CNPC International (50 per cent), France's Total (25 per cent) and Petronas (25 per cent) are due to sign for the exploitation of the Halfaya field which has estimated reserves of 4.09 billion barrels.

On Thursday, the group consisting of Russia's Gazprom (40 per cent), Turkish firm TPAO (10 per cent), South Korea's Kogas (30 per cent) and Petronas (20 per cent) will ink a pre-contract to develop the 109 million-barrel Badra field.

On December 29, Russia's Lukoil (85 per cent) and Norway's StatoilHydro (15 per cent) will ratify the preliminary contract to exploit West Qurna-2, the largest field to be awarded in the latest auction, with reserves of 12.876 billion barrels.

Finally, on December 30, Angolan firm Sonangol will sign the two preliminary contacts it won that cover the Najmah and Qaiyarah fields in the northern Ninevah region, which contain estimated reserves of 858 million and 807 million barrels, respectively.

Iraq holds the world's third-largest crude oil reserves after Saudi Arabia and Iran, with some 115 billion barrels. But wars and the embargo imposed in 1990 have hampered the exploration and development of its oil resources for decades. Production currently stands at 2.4 million barrels a day, about two million of which are exported. Iraqi oil revenues represent 85 per cent of government receipts.

Meanwhile, Angola's Sonangol said several companies have shown an interest in forging joint-exploration partnerships with it.

It won the rights to explore the Qayara and Najmah oilfields - the smallest on offer.

'Several companies have already shown an interest in forging partnerships to explore these reserves,' Sonangol said in the statement published on Angolan state-owned news agency Angop.

With little capability to drill for oil at home, let alone in Iraq, analysts say Sonangol is very likely to partner with one or more oil companies to help it develop the two oil fields.

They offered the highest per-barrel remuneration fees at the auction - $5 for Qayara and $6 for Najmah. The higher fees reflect the smaller size of the fields and the lower quality oil they will produce.

It may also indicate the difficulties facing Sonangol in a dangerous corner of Iraq, still grappling with post-war violence. The nearby city of Mosul is one of the most violent cities in the country.

Sonangol said the move to drill abroad was part of a strategy to bolster Angola's global image. The oil company is also eyeing exploration opportunities in Brazil, Ecuador and the tiny African island state of Sao Tome and Principe.